Exhitit 10.1
ADDENDUM TO ASSET PURCHASE AGREEMENT
This Addendum is made the 1st day of October 2004 by and between THE
XXXXXXX CORPORATION ("Buyer") and XXXX, INC. ("Seller") with respect to the
Asset Purchase Agreement between the parties dated August 18, 2004 ("APA"):
1. The parties wish to confirm that (i) the entire consideration referenced
in section 3.1.2 of the APA is due and payable to Seller, (ii) the shares of
Buyer's stock referenced in section 3.1.2 of the APA are being issued to
Seller's shareholders directly, at Seller's request, as part of Seller's plan of
liquidation, and (iii) Seller will assign its right to receive stock of Buyer to
Seller's shareholders on or before the Closing Date.
2. The parties agree to add the following paragraphs collectively as
paragraph 3.2.1 to the APA:
3.2.1. Buyer has obtained qualified independent appraisals of land for
$528,000, building and improvements for $1,342,000, and machinery and equipment
including laboratory equipment and office furniture for $4,086,000. Buyer
proposes allocation of purchase price of $1,318,670 for land, building, and
improvements and $2,881,330 for machinery and equipment as defined above.
Inventory remains at $900,000. The above would constitute the allocation of
purchase price based upon Buyer's appraisals under Paragraph 3.2. Buyer shall
provide to Seller a memorandum by October 11, 2004 by fax and/or e-mail
outlining Buyer's method of allocation of the purchase price. Buyer's memorandum
shall include an analysis of the statutes and/or regulations requiring
appraisals as a condition of Buyer's acquiring the assets purchased under this
Agreement. Buyer shall also provide an analysis of why machinery and equipment
is valued on the basis of continued use as opposed to the valuation provided by
American Appraisal Associates dated August 19, 2004 and reflecting a valuation
amount of $1,958,000 (liquidation value). Buyer shall also provide an analysis
as to the methodology by which real estate was valued under its appraisals, and
Buyer will provide an analysis as to why Buyer must use the same valuations for
reporting to the Internal Revenue Service as it uses for its Audited Financials
as a Public Company under the Securities Exchange Commission Rules and
Regulations and the Requirements of the Xxxxxxxx-Xxxxx Act.
Buyer and Seller agree that at Seller's expense Seller may elect to
obtain qualified independent appraisals for land, building and improvements
and/or machinery and equipment. Seller's election to obtain such appraisals must
be made by October 20, 2004. In the event Seller fails to elect to obtain such
appraisals by October 20, 2004, the allocations set forth above will be the
final allocations under Paragraph 3.2.
Should Seller at its own expense elect to conduct the appraisals the
appraisals must be completed on or before November 22, 2004. If the appraisals
vary from the appraisals obtained by Buyer, Buyer's and Seller's appraisers
shall meet and determine whether they can agree on valuations for land, building
and equipment and machinery and equipment as set forth above by November 29,
2004. If they can agree on such valuations, Seller and Buyer shall be bound by
such agreement. In the event that the appraisers cannot agree on such
valuations, the appraisers shall appoint a qualified independent appraiser to
determine valuations for land, building and/or equipment and machinery. Buyer
and Seller agree that the appraisers shall select this third appraiser by
October 20, 2004 whose fees and costs will be as follows: $100.00 by the Seller
and the remainder by the Buyer.
The third appraiser shall appraise the assets referenced above and
such appraisal shall be completed by November 30, 2004. Buyer and Seller shall
be bound by this appraisal in the event that Buyer's and Seller's appraisers
referenced in the preceding paragraph fail to agree on valuations.
In the event Buyer does not provide its memorandum to Seller by
October 11, 2004, all other dates shall be extended, day for day, by the number
of days beyond October 11, 2004, which pass before delivery of the memorandum.
3. The parties agree that the APA shall otherwise remain unchanged and in
full force and effect.
THE XXXXXXX CORPORATION
By: /s/ Xxx X. Xxxxxxx
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XXXX, INC.
By: /s/ Xxxxx X. Deck
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